Governance

Corporate Governance and Business Ethics

In managing the organization transparently and ethically, the Company must have good corporate governance and business ethics. This involves establishing a governance structure that covers all company activities and setting policies and practices in line with laws and regulations, the organization's core values, and ethical standards. The Company recognizes that effective corporate governance builds trust in the organization, prevents undesirable negative impacts such as corporate corruption or legal violations, and protects the Company's reputation. Trust earned from stakeholders contributes to the Company's success and may lead to long-term benefits, while poor governance can result in lasting damage.

Good Corporate Governance and Business Ethics Policy

The Company has established a good corporate governance policy, referring to the Principles of Good Corporate Governance of Registered Companies in 2017 by the Securities and Exchange Commission. It includes 8 principles that the Company's Board of Directors must adhere to in governing the organization. Additionally, the Company has formulated other relevant policies, such as the anti-corruption policy, social responsibility policy, conflict of interest prevention policy, and CoC guide for employees at all levels.

The Board of Directors has delegated oversight of policy compliance to the Ethics Committee, ensuring adherence to various policies related to the Company's good corporate governance. Furthermore, the Company engages in other activities related to good corporate governance, such as reporting conflicts of interest in December of each year or when conflicts arise during the year. The Company's management and employees sign a business ethics, and the Company communicates its business ethics to suppliers who must acknowledge and strictly adhere to them.

The Company has established channels for receiving and reporting complaints, such as through the Company's website or directly from employees or external parties through various designated departments. Investigations and penalties are conducted and imposed when there are violations or actions contrary to the law and ethics, with reports submitted to the Company's Board of Directors.

In 2022, the Company received 1 complaint related to corporate governance and a breach of business ethics, which also involved a violation of the law. The violation is categorized as follows:

Sustainability Risk Management

The Company uses the risk assessment process based on the COSO-ERM 2017 and ISO 30001 risk management frameworks to evaluate the organization's risks, considering both internal and external factors. This includes planning for risk control measures, risk assessment, quarterly report to management and risk management committee. The Company assesses various aspects of risks, such as:

• Strategic risks, such as the risk of being unable to partially adjust electricity prices to match fuel costs.
• Financial risks, including exchange rate volatility, liquidity issues, and securing funding for business expansion.
• Operational risks related to fuel procurement for electricity production, such as biomass, coal, and rubber oil.
• Compliance risks, such as requirements in electricity supply contracts with related companies and industrial customers.
• Environmental, Social, and Governance (ESG) risks.
• Company’s image and reputation risks.

In managing these risks, the Company establishes Key Risk Indicators (KRIs), risk appetite, and risk tolerance as follow:

1. Key Risk Indicators (KRIs) are tools to measure activities that may increase the Company's risk, indicating causes or impacts of that risk.
2. Risk Appetite is the overall level of KRI that the organization accepts to achieve its mission or vision. It aligns with Key Performance Indicators (KPI) targets in the business plan.
3. Risk Tolerance is the acceptable level of deviation or fluctuation from Risk Appetite. It may vary from Risk Appetite for at most 1 level, for example:

The Key Risk Indicators include both financial and non-financial metrics, as follows:

1. Quantitative/numeric financial impact metrics with 5 criteria:
   1. Percentage decrease in revenue from the target
   2. Percentage decrease in EBITDA from the target
   3. Percentage decrease in cash flow/liquidity from the target
   4. Actual expenses exceeding the budget (percentage)
   5. Production lower than the target (percentage)
2. Quality-based non-financial impact metrics with 7 criteria:
   1. Reputation/image (days with negative news in various media)
   2. Safety impacts on individuals
   3. Environmental impacts
   4. Impacts from risks affecting operations with a duration for resolution and improvement
   5. Occurrence of disasters
   6. Regulatory compliance
   7. Human resources aspects

After defining these risk indicators, the Company uses a Risk Matrix to assess the significance of business-related risks. The assessment considers the level of impact and the likelihood of occurrence, and each risk level is managed with varying intensities, as detailed in the table below.

The Company regularly monitors and evaluates its risk management performance monthly. Quarterly reports are then presented to the Risk Management Committee.

Supply Chain Management

Suppliers are considered crucial components in conducting business. The Company places great importance on managing and taking care of its suppliers, treating them no less favorably than other stakeholders. The Company focuses on engaging with suppliers with respect, transparency, and fairness, recognizing that being a supplier is contingent on the principle of equality. This approach builds confidence with suppliers, fostering a long-term collaborative business relationship. Moreover, the Company promotes the development of partner capabilities by implementing standardized quality development systems, ensuring mutual and sustainable growth for both suppliers and the Company.

Policy and Suppliers Management Approach

The Company divides the procurement process into three main groups to support its business operations namely 1. Parts and Chemicals, 2. Biofuel, and 3. Coal. Each group establishes policies and practices specific to the context of their activities, including determining suppliers to provide raw materials to the Company. These practices must comply with legal requirements and align with the ISO 9001 Quality Management System standards.

Overall, the Company's procurement process is guided by policies and practices, which includes trade cooperation policies, vendor selection criteria, and ethics for suppliers. The Company specifies that every supplier must sign an acknowledgment, committing to transparency, integrity, and business ethics, and they must maintain quality standards in delivering goods.

Suppliers are also required to demonstrate responsibility to society, communities, and the environment, and comply with legal requirements. The Company conducts random assessment of suppliers, both through on-site visits and online, twice a year following ISO 9001 standards.

Additionally, there are supplementary quality checks to ensure that raw materials, products, and services meet the specified standards throughout the entire process, from procurement to delivery.

New Business Partner Selection Process

The Company determines the process for selecting the new suppliers, which include the following 3 key steps:

1. Initial assessment of business partner qualifications: The Company will conduct a preliminary inspection on the qualification of the selected suppliers, considering various aspects such as the clarity of the supplier's name and location, business registration for more than 1 year, and a verifiable track record and history.
2. Registration and submission of supplier information: After evaluating the preliminary qualifications and determining that a supplier falls within the scope of consideration, the Company will contact the supplier for price proposals or to provide further information. The central procurement department will communicate with partners through the online system (Zoom) or conduct on-site visits if feasible, to aid in evaluating price proposals and selecting suppliers for the next stage.
3. Request for approval to register the supplier: Following the consideration of price proposals and supplier selection, the Company will request approval to register the selected suppliers. The process is considered complete after successfully navigating through all these stages.

Traceability System

The Company has implemented a traceability system for quality control of raw materials, covering various types of raw materials. The Company will record data by tracing back to the origin of the raw materials to prevent the delivery of substandard or incorrectly specified raw materials. Additionally, there is a regular random inspection of raw materials to ensure that the materials used for energy production are efficient and can be utilized to their maximum benefit.

Emerging Risks

The issues related to climate change has significantly impacted various global situations from the past to the present. As a company in the energy industry, these issues are unavoidable, and if they affect the Company, they may have a continuous impact on various suppliers collaborating with the Company.

In the energy industry, there is a risk that government regulations may impose new laws or set new requirements that could affect the volatility of energy prices. This, in turn, may have a consequential impact on suppliers, as the Company relies on them to source raw materials for energy production. Therefore, suppliers may incur losses due to reduced orders for raw materials

Cyber Security and Personal Data Privacy

Information technology holds a vital role in contemporary business operations. Cyber threats present a formidable global challenge for organizations, both domestically and internationally. Neglecting cybersecurity and personal data protection can detrimentally affect stakeholder trust in the Company. Moreover, overlooking cybersecurity measures can disrupt business operations. For instance, a cyber-attack resulting in the loss of critical data within the system can halt workflow processes.

The Company acknowledges the significance of cybersecurity and safeguarding personal data. Consequently, it has established guidelines and frameworks adhering to international standards and pertinent laws. Regular scrutiny of these matters ensures preparedness to facilitate learning across all levels and departments, fostering a cybersecurity culture integral to the organization. This proactive approach aims to equip the Company to effectively counter cyber and information threats in all forms.

Emerging Risks

Due to changes in business methods that has turned to relying more on technology in every business process, therefore, cybersecurity risks are unavoidable and should be best prevented. This is because cybersecurity and personal data security are vital to business operations. It also affects the trust that customers have in the Company. Failure to maintain cybersecurity and personal data may cause the Company to have to deal with sudden operational disruptions or lawsuits due to data leaks.

The Company is aware of the importance of cybersecurity and the safety of personal information. Therefore, prevention has been carried out through the 3 lines of defense approach by assigning relevant departments to supervise and monitor cyber risks that may affect the security of the Company's information technology systems. There are also plans to invest further in network access control. To enhance the security of the Company's information technology system. It is expected to be completed in 2024.

Key Performance

	Conduct training sessions to impart fundamental Cyber Security User Awareness knowledge to employees.
	Form a dedicated working group to oversee and uphold cyber security and business continuity.
	Develop a virtual contingency plan for the Company in the event of a cyber-attack.
	Number of cyber security or data privacy complaints.	0 case

Technology and Innovation

Considering swift transformations in global geopolitical and climatic landscapes, companies worldwide must acclimatize to these shifts for sustained growth and resilience. Acknowledging this imperative, the Company places a premium on innovation to drive ongoing growth and sustainability. The Company is steadfast in its dedication to fostering and implementing innovations that not only enhance efficiency in electricity production but also uphold environmental stewardship and yield societal benefits.

in 2007, the Company established the Integrated Research Center Company Limited, or IRC, tasked with spearheading research and innovation for the Company group. It is dedicated to researching innovations aimed at enhancing overall production efficiency. Research endeavors are divided into three categories: energy, water and waste materials, and plant breeding. Notably, the Company has secured protection for 11 new plant varieties since 2017. Furthermore, it boasts a government-accredited laboratory for scientific testing and offers services for wastewater and air quality measurement, along with other scientific analyses, both internally and externally, employing modern technology and adhering to legal regulations.

Furthermore, Integrated Research Center Company Limited (IRC) oversees research and development for the Company group. In 2023, the center conducted 15 research projects, outlined as follows:

Customer Relationship Management

The Company prioritizes customer satisfaction with its products and services, thus committing to upholding operational and management standards. This includes adhering to the principles of treating customers responsibly, honestly, and with care to provide a positive user experience and service. The primary customers of the Company are those purchasing electricity, water, and steam services for industrial purposes, all of whom are considered major clients.

Emerging Risks

Managing customer relationships is critical for the business's operations, impacting its growth and reputation in both the short and long term. As a provider of electricity, water, steam, and alternative gas services to industries, prioritizing customer satisfaction is paramount. This ensures customers continue to choose the Company’s services. Additionally, providing accurate information to customers about the benefits of alternative energy is essential. It helps them understand the importance of transitioning to alternative energy sources over coal.

The Company recognizes the significance of maintaining a stable supply of electricity, water, steam, and gas for industries, along with the potential disruptions that could arise. Consequently, the Company has developed a structured approach to manage complaints and issues effectively. Moreover, the Company acknowledges customers' preference for self-produced alternative energy, such as solar electricity. Therefore, it plans to tailor service contracts to align with customer preferences.

	Customer satisfaction across the entire electricity business	70 percent
	Customer satisfaction across the entire industrial water business	83 percent
	Customer complaints regarding the quality and safety of products and services	0 case